System of unit labour cost, OECD - Updated: September 2016

Growth in OECD Unit Labour Costs picks up to 0.5% in the second quarter of 2016

2016-09-20

Growth in unit labour costs (ULCs) in the OECD area picked up to 0.5% in the second quarter of 2016 (compared with 0.1% in the previous quarter) as growth in compensation costs accelerated (0.6%, compared with minus 0.1% in the previous quarter). Labour productivity increased only marginally (0.1% after decreasing for two consecutive quarters).

Early Estimates of Quarterly Unit Labour Costs
Seasonally adjusted data, Total economy
ULC-500-09-16.fw_.jpg

In the United States, ULCs rose strongly (0.9% in the second quarter, compared with flat growth in the previous quarter), as compensation costs rebounded (up 1.1%, compared with minus 0.8% in the previous quarter), offsetting a pick-up in labour productivity (up 0.2%, compared with minus 0.8% in the previous quarter). ULCs also rose strongly in the United Kingdom (to 1.2% in the quarter immediately preceding the referendum on EU membership, compared with 0.2% in the previous quarter), as compensation costs increased (up 1.3%) at their highest rate since the third quarter of 2012. In Canada, a sharp fall in productivity (minus 0.6%) pushed up ULCs (by 0.6%, compared with minus 0.2% in the previous quarter). ULCs were stable in Japan (after a 0.3% decrease in the previous quarter), reflecting flat labour productivity and compensation costs.

In the Euro area, ULCs picked up marginally (by 0.2%, compared with 0.1% in the previous quarter) as labour compensation growth slowed to 0.2%. Productivity fell for the fourth consecutive quarter in Italy, with ULCs increasing by 0.5%. Productivity also contracted in France but flat compensation costs kept ULCs in check (up 0.2%). Growth in compensation costs eased in Germany (to 0.3%) but a slowdown in productivity growth (up 0.1%, compared with 0.3% in the previous quarter) nudged up ULCs marginally (by 0.1%). Compensation costs contracted significantly in Portugal (by 0.6%) and Greece (by 1.0%), pushing ULCs into negative territory (by 0.3% and 0.7% respectively), unwinding some of the strong pick-up seen in the previous quarter. On the other hand, compensation costs rose markedly in Spain (up 0.8%), driving ULC growth (to 0.5%, compared with minus 0.3% in the previous quarter). Spanish productivity grew at its highest rate in five quarters.

Source: Organization for Economic Co-operation and Development